Correlation Between Pembina Pipeline and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and Manulife Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pembina Pipeline and Manulife Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembina Pipeline Corp and Manulife Financial Corp, you can compare the effects of market volatilities on Pembina Pipeline and Manulife Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pembina Pipeline with a short position of Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and Manulife Financial.
Diversification Opportunities for Pembina Pipeline and Manulife Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pembina and Manulife is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and Manulife Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial Corp and Pembina Pipeline is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pembina Pipeline Corp are associated (or correlated) with Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial Corp has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and Manulife Financial go up and down completely randomly.
Pair Corralation between Pembina Pipeline and Manulife Financial
Assuming the 90 days trading horizon Pembina Pipeline Corp is expected to generate 0.99 times more return on investment than Manulife Financial. However, Pembina Pipeline Corp is 1.01 times less risky than Manulife Financial. It trades about 0.16 of its potential returns per unit of risk. Manulife Financial Corp is currently generating about -0.12 per unit of risk. If you would invest 2,212 in Pembina Pipeline Corp on September 1, 2024 and sell it today you would earn a total of 58.00 from holding Pembina Pipeline Corp or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. Manulife Financial Corp
Performance |
| Timeline |
| Pembina Pipeline Corp |
| Manulife Financial Corp |
Pembina Pipeline and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and Manulife Financial
The main advantage of trading using opposite Pembina Pipeline and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, Manulife Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Manulife Financial will offset losses from the drop in Manulife Financial's long position.The idea behind Pembina Pipeline Corp and Manulife Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Manulife Financial vs. Fairfax Financial Holdings | Manulife Financial vs. iShares Canadian HYBrid | Manulife Financial vs. Brompton European Dividend | Manulife Financial vs. Solar Alliance Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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